# Maximum US tax on income?

**URL:** https://boards.straightdope.com/t/maximum-us-tax-on-income/810429
**Category:** Factual Questions
**Created:** [March 12, 2018, 1:36pm UTC](https://boards.straightdope.com/t/maximum-us-tax-on-income/810429 "2018-03-12T13:36:19Z")
**Posts on this page:** 1
**Page:** 4

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### Author: ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)
#### Post date: [March 31, 2018, 1:11pm UTC](https://boards.straightdope.com/t/maximum-us-tax-on-income/810429/61 "2018-03-31T13:11:54Z")

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> [@spinky](#):
>
> What would be the most fair is to collect the tax in the same “currency” as the award. You get 1000 shares’ worth of “income”? Your income marginal rate is 33%? Ok, you give up 330 shares to the government. If the stock values goes to zero, you owe 330 shares of jack squat, because you ended up receiving 1000 shares of jack squat. It makes perfect sense.

I guess here we get into the discussion of “what is income?” and “when is the income realized - made real?”

Most stock options are future-dated(? is that the expression?) because if not, why not just give you the stock at fair market value now. The idea is you get a certificate to buy X shares at $Y on the theory that if, in part thanks to your titanic effort, the stock goes up instead of hitting an iceberg, you will make an immediate profit - sometime in the future.

I assume that most such options are not tradable. The person being rewarded must specifically redeem them. Otherwise, they are simply futures options. (Plus, there are other requirements, like “still employed by the company”. You hear of situations where someone is conveniently let go just before their options vest.) Do they typically expire too?

So essentially, these things are worthless until they are redeemed. Therefore, logically, on day X-1 you own nothing, on day X you own Y shares worth $Z, thanks to your employer’s generosity. You only paid N for them, the rest is cash in pocket - (Z-N). It’s income, you owe taxes. pretty logical to me. I assume there’s some clever accounting trick where it’s capital gains so you pay les taxes.

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